Lindsell Train (LTI)
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Lindsell Train Investment Trust (LTI) provides investors with a unique portfolio, marrying a high-conviction global equity strategy with a holding in Lindsell Train Limited (LTL), the management company behind this trust and a much wider business. LTI is managed by the longstanding manager and co-founder of LTL, Nick Train, who employs a strict quality-focussed, ownership-based approach to identify companies he hopes will offer the greatest opportunity to generate very long-term, sustainable growth for shareholders.
As discussed in Portfolio, this has typically resulted in a greater allocation to more defensive, staple-like businesses that have the potential to offer growth across the market cycle whilst offering some protection against inflation and the increased cost of borrowing. Some diversification is offered through the US and UK allocations to the LF Lindsell Train North American Fund and the Finsbury Growth and Income Trust, both managed by the team at Lindsell Train. However, what really sets the trust apart is the exposure to the underlying economics of LTL, which currently makes up 40% of LTI’s NAV. LTL is periodically valued by the board based on AUM and profitability and exposes LTI shareholders to risks as well as opportunities. The holding is also responsible for significant volatility in the share price discount and premium.
A focus on quality employed by the managers has contributed to the trust’s consistently strong Dividend growth. That said, the dividend has historically been bolstered by LTL’s dividends, giving LTI the highest dividend yield within the AIC global sector at 5.8% versus a sector average of 2%.
Long-term NAV Performance has been strong, in large part driven by the holding in LTL. However, shorter term the relatively balanced stylistic exposure has meant LTI has underperformed during both growth and value-driven environments. The pressure on LTL’s valuation has also weighed on performance. This has contributed to high discount volatility, and LTI has traded its longstanding premium rating for a Discount which has continued to widen to 11%.
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